Billionaire Salim's entity to buy out China Minzhong Food

Marvellous Glory Holdings, controlled by billionaire Anthoni Salim, offered to acquire the rest of China Minzhong Food Corp.
Marvellous Glory Holdings, controlled by billionaire Anthoni Salim, offered to acquire the rest of China Minzhong Food Corp.PHOTO: BLOOMBERG

JAKARTA (BLOOMBERG) - A company controlled by billionaire Anthoni Salim offered to acquire the rest of China Minzhong Food Corp. in a deal valuing the Chinese company at S$786 million, helping the Indonesian tycoon exercise greater control over a food empire spanning potato chips, instant noodles and cooking oil.

Marvellous Glory Holdings offered S$1.20 in cash for each share in China Minzhong Food, according to a filing in Singapore, where China Minzhong is listed. That's 25 per cent more than the stock's last closing price. Investors can choose an alternative in the form of cash and exchangeable bonds under terms in the offer. Shares of the Chinese vegetable-processing company jumped 18 per cent to close at S$1.135 in Singapore Wednesday.

The deal makes sense for China Minzhong Food's largest shareholder, Salim's Indofood Sukses Makmur, according to Syaiful Adrian, an analyst at Ciptadana Sekuritas. A buyout would allow China Minzhong Food, which reported a third decline in annual profit for the year ended June 30, to be removed from Indofood's books.

"Minzhong Food has been weighing on Indofood," Mr Adrian said by telephone from Jakarta. "Indofood could also use the proceeds from the sale to repay some if its foreign-currency debts and reduce the exchange-rate risk on the company."

Indofood had total foreign-currency debt of about US$1.1 billion (S$1.48 billion) as of June, or about half of its 28.6 trillion rupiah (S$2.97 billion) in liabilities, according to the company's financial report.

China Minzhong Food will be delisted if the offer goes through, according to the document.

Salim has a net worth of US$3.3 billion, according to the Bloomberg Billionaires Index. His First Pacific, through Jakarta-listed Indofood, owns 82.88 per cent of China Minzhong Food. Salim has a combined direct and indirect interest of about 45.11 per cent in Hong Kong-listed First Pacific, the filing dated Sept. 6 showed.

The offer requires preconditions to be met, including approval from independent shareholders of Indofood and First Pacific for the Jakarta-based company to sell its stake in China Minzhong Food. Salim will be required to abstain from voting on the resolution, according to the document.

The offer is also contingent on the acquirer gaining acceptances for shares carrying more than 50 per cent of voting rights, the document showed.

China Minzhong Food said the proposal would allow "greater control and management flexibility" in implementing "strategic initiatives," according to the filing.

A takeout of China Minzhong Food would add to more than a dozen delistingsannounced in Singapore with a combined market value of S$4.5 billion in the first half of 2016 alone, according to data compiled by Bloomberg.

"Valuations have been beaten down so there is a lot of incentive to take them private," said Jeremy Teong, an analyst at Phillip Securities Pte. in Singapore.